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Edited Transcript of RIGL earnings conference call or presentation 8-Aug-18 9:00pm GMT

Q2 2018 Rigel Pharmaceuticals Inc Earnings Call

South San Francisco Aug 24, 2018 (Thomson StreetEvents) -- Edited Transcript of Rigel Pharmaceuticals Inc earnings conference call or presentation Wednesday, August 8, 2018 at 9:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Anne-Marie S. Duliege

Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer

* Dean L. Schorno

Rigel Pharmaceuticals, Inc. - Executive VP & CFO

* Dolly A. Vance

Rigel Pharmaceuticals, Inc. - Executive VP of Corporate Affairs, General Counsel & Corporate Secretary

* Eldon C. Mayer

Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer

* Raul R. Rodriguez

Rigel Pharmaceuticals, Inc. - President, CEO & Director

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Conference Call Participants

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* Christopher Joseph Raymond

Piper Jaffray Companies, Research Division - MD & Senior Research Analyst

* Guyn Kim

BMO Capital Markets Equity Research - Analyst

* Joseph Pantginis

H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst

* Kyung Yang

Jefferies LLC, Research Division - MD & Senior Equity Research Analyst

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Presentation

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Operator [1]

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Good afternoon. Welcome to Rigel Pharmaceuticals Financial Conference Call for the Second Quarter of 2018. (Operator Instructions) I would like to remind you that this call is being recorded for replay purposes from Rigel's website. (Operator Instructions)

And now I will turn this conference over to our first speaker, Dolly Vance, who is Rigel's Executive Vice President, Corporate Affairs and General Counsel.

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Dolly A. Vance, Rigel Pharmaceuticals, Inc. - Executive VP of Corporate Affairs, General Counsel & Corporate Secretary [2]

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Welcome to our financial results and business update conference call. The financial press release for the second quarter of 2018 was issued a short while ago and can be viewed, along with the accompanying slides for this presentation, in the News & Events section of our Investor Relations page on our website, www.rigel.com.

As a reminder, during today's call, we may make forward-looking statements regarding our financial outlook, our plans and timing for regulatory and product development and the status and plans of our commercialization of TAVALISSE in the U.S. These statements are subject to risks and uncertainties that may cause actual results to differ from those forecasted. A description of these risks can be found in our most recent quarterly report in Form 10-Q on file with the SEC. Any forward-looking statements are made only as of today's date, and we undertake no obligation to update these forward-looking statements to reflect subsequent events or circumstances.

At this time, I would like to turn the call over to our CEO, Raul Rodriguez.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [3]

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Thank you, Dolly. Joining me on the call today, in addition to Dolly, are Eldon Mayer, our Chief Commercial Officer; Anne-Marie Duliege, our Chief Medical Officer; and Dean Schorno, our new Chief Financial Officer. Welcome, Dean.

Turning to Slide 6. We have a very important agenda today. I think it's our most exciting ever. We will provide an update on our commercial launch of TAVALISSE and give you some initial insights from the first 4 weeks of product availability. We will also provide you an update on clinical and regulatory plans for the rest of the year. And finally, we will provide an update on our financial position, including, for the first time ever, reporting on product revenue.

Turning to Slide 8. This was a monumental quarter for Rigel, and I'm happy to report that we are ready to drive to commercial success with TAVALISSE. In Q2 of this year, we achieved a goal that has been in our sights for many years. In April, TAVALISSE was approved for the treatment of adult chronic ITP in patients who have had an insufficient response to a previous treatment. We then hired, trained and deployed a very experienced commercial team across the U.S. This allowed us to successfully launch TAVALISSE in May, which was followed by our first product revenue, which we will report for you today, $1.8 million in net product revenue in just over 4 weeks.

We are already hearing from physicians treating patients suffering from ITP about how the product is improving the lives of some of these patients, and I can't tell you how delighted we are to report to you on our early progress. Before I turn the call over to Eldon to give you a bit -- I wanted to give you a bit of a background on ITP and the medical need, since some of you are new to the story.

On Slide 9, ITP is a serious autoimmune disorder characterized by a low platelet count of less than 100,000 per microliter of blood. Normal platelet counts range from 200,000 to 400,000. There are approximately 65,000 adult chronic ITP patients in the U.S., with the worldwide market for treatment exceeding 1.5 billion, and it continues to grow. The major clinical manifestations of the disease are petechiae and bruising. But when patient -- platelet counts drop to less than 30,000, it could be much more severe and lead to bleeding and potential cerebral hemorrhage, which may result in death. The goal of many physicians is to get patients into a safe zone above 30,000 platelets.

ITP is -- on Slide 10, ITP is a clinically heterogeneous and difficult-to-treat disease for many reasons. The severity of disease varies widely across patients and is not always correlated with their platelet counts. It's not known which patients will respond to which specific treatments. When there is a response, it's not always consistent. These treatments can have side effects, which are concerning, especially in long-term use. And many treatments themselves reduce the quality of life of patients by their dosing regimen or their delivery. As there's a need for -- there's a substantial unmet need for new treatment options that may address some of these concerns. We believe that TAVALISSE may address some of these significant unmet needs.

Before I turn the call over to Eldon, I wanted to just mention that Rigel will be holding an Analyst Day meeting in October, October 4 tentatively, and we will follow up with details in the weeks to come.

I will now turn the call over to Eldon to provide an update on our initial launch. Eldon?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [4]

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Thank you, Raul, and thank you all for joining us today. Before I talk about the launch of TAVALISSE, I'd like to put this update into context. As you know, we launched at the very end of May, so the numbers and trends I'll review here are based on only the 4 -- first 4 weeks of launch. Where relevant, I'll provide additional insight into early trends we are seeing through the first part of Q3. It's important to note that TAVALISSE has been on the market for just 2 months. So with that said, I'll move on to Slide 13.

Since the official launch of TAVALISSE on May 29, initial response indicates our strategies are working well. We are receiving positive physician and payer response. I'll delve into these areas a bit more in a moment, but just to summarize, our key takeaways are: TAVALISSE value proposition is resonating well with physicians. Prescriptions are being covered by both commercial and government payers, and reimbursement is occurring as expected. We are seeing initial benefits of the TAVALISSE broad indication, with demand for the product across all lines of therapy.

Slide 14. Early indicators from these first 4 weeks of launch demonstrate good demand for the product, which has continued into Q3, as well some anticipated channel stocking. In the second quarter, we realized $2.3 million in gross revenue, with approximately $700,000 of that in patient demand and the remainder in distribution channel inventory. Importantly, we're seeing a range of doctors across the country prescribe TAVALISSE, including hematologists; hematologist/oncologists, or hem/oncs, across large practices, small practices and clinics. And 77 bottles of TAVALISSE were delivered to patients and reimbursed in the second quarter. We are pleased by this early demand for the product just 4 weeks in, combined with the physician and payer feedback we've received to date.

Slide 15. A major contributor to our strong start is that we had our commercial team and infrastructure in place from day 1. At launch, we deployed an experienced commercial team supported by a medical affairs team, and both are 100% focused on TAVALISSE for ITP. These professionals are highly experienced in hematology/oncology rare disease, and they have enabled us to hit the ground running. This includes a commercial team of over 50 strong comprised of sales, marketing, market access and business operations. Our highly experienced sales force is allowing us to rapidly and effectively target approximately 80% of ITP high-prescribing physicians and is getting good access to those physicians and their offices. A market access team, including medical affairs, is engaging with payers at both a national and regional level and is initially focused on the top 25 payers that account for over 90% of covered lives. Our medical affairs team is fully deployed, answering medical inquiries, educating HCPs about ITP and TAVALISSE. And our website, www.tavalisse.com, also launched, providing an additional easy-to-access resource for patients and physicians. Our launch efforts kicked off at ASCO in early June, where we had a good level of engagement with HCPs.

And on Slide 16, you will see our marketing campaign, Stand Strong Against Platelet Destruction, which was featured at our large ASCO booth and was well received. Feedback has been very positive from physicians as the campaign communicates that TAVALISSE, with its unique mechanism of action, can provide a defense against ongoing platelet destruction. The imagery and messaging are resonating well with physicians, both increasing awareness of the product and inspiring physicians to identify appropriate patients that may benefit from this novel and targeted therapy. In the months ahead, we expect to present and publish additional data and hold sessions at other major medical meetings known for hematology and oncology to increase awareness about the availability of TAVALISSE and encourage the sharing of physicians' early positive experiences with it.

Looking at Slide 17. As I indicated earlier, physicians are responding enthusiastically to TAVALISSE, and several factors are contributing to early adoption. Physicians are responding well to messages about TAVALISSE mechanisms of action that targets an underlying cause of the disease. This, combined with its rapid, robust and durable response, manageable safety profile, convenience and pricing, make TAVALISSE an attractive treatment option for patients with chronic ITP. Also, there is a confidence in managing safety in dosing. Early signs indicate that physicians appear to be comfortable with the TAVALISSE adverse event profile, and it has not been a barrier to prescribing TAVALISSE.

As you know, ITP is a heterogeneous disease with no standard treatment paradigm in the post-steroid setting. This leads to great variability in how clinicians select therapies for their patients. Our value proposition allows us to tailor our message depending on physicians' particular treatment approach and needs for each patient. As a result, we've already seen usage of TAVALISSE across all lines of therapy.

And while we anticipated, and are seeing, most initial use in later-line patients, we expect as physicians have positive experiences with these patients, they will be motivated to try it earlier in the treatment process before they have failed numerous therapies.

Lastly, in field-based interactions, many physicians are telling us they are encouraged to have a new option that works differently than other approved treatment options. And anecdotally, some early feedback we've received is that physicians are seeing a good response from many of their patients on TAVALISSE and seeing it within the first week. This is very encouraging, especially considering many patients on TAVALISSE thus far appear to have not responded sufficiently to multiple prior therapies.

Slide 18. Turning to market access. As we meet with payers at both a national and regional level, we have received positive feedback on the product, the unmet need in this patient population and pricing. Positive early coverage decisions in the initial 4 weeks continue into Q3 and include large PBMs, regional payers, Medicaid and Medicare Part D as well as TRICARE. Coverage decisions are occurring on expected time lines. We expect formulary placement decisions will be made in the usual time frames when P&T Committee meetings are scheduled. It is standard for these meetings to take several months.

The reimbursement coverage process also appears to be as anticipated, with most payers requesting a prior authorization to the package insert for indication. Our distribution model, including our specialty pharmacy network, has also been received well with both the prescribing base and payers. Initially, we project about 50% of the patient enrollments having government payers and 50% having commercial payers. In the event of delayed access decisions or other patient support that may be needed, patients can access their prescription with support through RIGEL ONECARE, our practice and patient support center. Patients can receive a free trial program if they experience a delay in getting access to TAVALISSE, and we are seeing these patients convert to reimbursed status.

And now finally, onto Slide 19. In closing, our launch strategy is working well, and we are executing our plan with positive physician and payer response. We continue to build on our launch momentum into Q3 and beyond by focusing our efforts on, one, educating physicians about the science and clinical profile of TAVALISSE; two, highlighting appropriate candidates for treatment; and three, supporting patient access regardless of provider source. I look forward to continuing to update you on our progress in the future.

Now I'll turn the call over to Anne-Marie.

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [5]

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Thank you, Eldon. I will start on Slide 21. Now that we have launched TAVALISSE in ITP, we look to leverage the unique mechanism of action of SYK and the proven safety profile of fostamatinib to broaden its use within ITP and beyond into new indications.

For ITP, we're on track for an MAA submission this year. We met with the rapporteur and co-rapporteur in the EU. The meetings were constructive, and the agencies were supportive of our filing strategy. For the autoimmune hemolytic anemia trial, we're having a dialogue with the FDA on the design of a registrational study. We expect it to be a placebo-controlled trial, and we're still discussing with the FDA the details of this program.

Finally, we're exploring the use of fostamatinib in other indications. We will provide more details on the fostamatinib product pipeline at the upcoming Investor and Analyst Day. It is important to note that we have composition of matter through 2026 with a 5-year patent term restoration expected, which would provide us with an exclusivity through 2031.

Slide 22. Let me update you on our ongoing studies. We continue to follow patients with ITP in a long-term extension study. At the most recent assessment, the median duration of response has not been reached and was greater than 28 months. In autoimmune hemolytic anemia, the primary endpoint was met in Stage 1, with 8 patients responding by week 24, that's 47%, and an additional responder at week 30. Patients continue in the extension study, and there was no new safety signal.

Finally, let me tell you a bit about the IRAK program that we moved into a Phase I study during this quarter. The investigational candidate R835 is an only available potent and selective inhibitor of IRAK1 and IRAK4 that blocks inflammatory cytokine production in response to toll-like receptor and the interleukin-1 family receptor signaling.

Toll-like receptors and interleukin-1 family receptors play a critical role in the innate immune response, and dysregulation of these pathways can lead to a variety of inflammatory conditions such as psoriasis, rheumatoid arthritis, inflammatory bowel disease and gout, among others. R835 prevents cytokine release in response to TLR and IL-1R receptor activation in vitro. In addition, R835 is active in multiple rodent animal models in inflammatory disease such as psoriasis, arthritis, lupus, multiple sclerosis and gout.

The Phase I in healthy volunteer with our IRAK 1/4 inhibitor is ongoing. The results from the first cohort show a linear PK profile and a clean safety profile. Additional single and multiple-dose cohorts are planned.

Now I will pass you back to Dean for financial a review.

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Dean L. Schorno, Rigel Pharmaceuticals, Inc. - Executive VP & CFO [6]

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Thank you, Anne-Marie. First, I'd like to say I'm extremely excited to be part of the Rigel team at this transformational point in our business.

Starting on Slide 25, here are some of the financial highlights from the quarter. First, let me point out that we recognize revenue using the sell-in methodology when our products are delivered to our specialty distributors. For the second quarter of 2018, 242 bottles were shipped to our specialty distributors, resulting in $2.3 million of gross product sales. 77 of those bottles were shipped to patients in clinics, while 165 of those bottles remained in our distribution channel at the end of the second quarter. We reported net product sales from TAVALISSE of $1.8 million, which has been recorded net of estimated discounts, charge-backs, rebates, returns, co-pay assistance and other allowances of $500,000, our gross-to-net adjustment.

Progressing to the next slide, our cost of product sales was approximately $30,000 or about 2% of net product sales. We reported total cost and expenses of $27.9 million in the second quarter of 2018 compared to $19.3 million in the second quarter of 2017. This increase was primarily due to personnel costs for our commercial and medical teams as well as third-party costs related to our commercial launch of TAVALISSE. We expect continued quarter-over-quarter increases in our total costs and expenses.

We reported a net loss of $25.6 million or $0.16 per share in the second quarter of 2018 compared to a net loss of $19.1 million or $0.16 per share in the second quarter of 2017.

During the second quarter of 2018, we completed a successful underwritten public offering of 18.4 million shares with over $67 million in net proceeds, including the exercise of the greenshoe in May of 2018. We expect that this financing will extend our runway into the fourth quarter of 2019 and provide for our continued commercial costs, along with the expansion of certain clinical programs. We ended the second quarter of 2018 with cash and short-term investments of approximately $135 million.

Back to you, Raul.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [7]

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Thank you, Dean. Before I wrap up, I'd like to give you an update on our current and future collaborations plans. Our strategy with TAVALISSE outside of North America is to put in place 2 major collaborations: one, a European partnership that would commercialize fostamatinib in all the major European countries; the other, an Asian partnership that would commercialize in Japan and other Asian countries. We expect both of these partnerships to be in place next year, starting with the first in the first half of 2019.

As an update to our current partnerships, we have been informed by Bristol-Myers Squibb that they will be terminating our preclinical collaboration in oncology. The primary reason was difficulty in finding an acceptable dosing regimen and therapeutic window. However, our clinical stage collaborations continue to make very good progress. BerGenBio is conducting 6 different clinical trials with our AXL inhibitor compound, bemcentinib, in various hematologic and solid tumors. Daiichi Sankyo is conducting various clinical trials with DS-3032, an MDM2 inhibitor, also in various hematologic cancers and solid tumors. And lastly, Aclaris is conducting clinical trials with a licensed JAK inhibitor in various forms of alopecia areata, an autoimmune disease that results in partial or complete loss of hair.

Looking at Slide 29. I'd like to remind you, one, we are delivering on our business strategy. We conducted a Phase III program in adult chronic ITP and announced promising results, our first. We filed the U.S. NDA for TAVALISSE in ITP, a first, and then we gained approval for this indication, also a first. And we are now commercializing TAVALISSE in the U.S.

So let me summarize for you what we covered on this call. One, there's an important medical need for the treatment in chronic ITP. TAVALISSE is now approved and helps fill the significant medical unmet need in ITP. Since the launch of TAVALISSE at the end of May, initial response indicates our strategy is working well. We are receiving positive physician, patient and payer responses. Prescriptions are being covered by both commercial and government payers. Physicians are gaining experience with TAVALISSE across all lines of therapy, and we believe TAVALISSE holds great potential to change how ITP is treated. And we are now working to expand the potential of TAVALISSE in Europe and Asia via partnerships. And we are working to expand fostamatinib in other indications, especially autoimmune hemolytic anemia. And finally, we're in a very strong financial position to execute on this strategy.

So with that, I'd like to turn the call to your questions. Operator, if you would?

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Questions and Answers

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Operator [1]

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(Operator Instructions) And your first question comes from Eun Yang with Jefferies.

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Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [2]

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Thanks for the detailed revenue analysis on TAVALISSE. So obviously, it's very early in the launch cycle, but do you think that -- over time, where do you think you would kind of stabilize in terms of end-user sales compared to gross product sales -- I'm sorry, net sales that you are booking?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [3]

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Yes, Dean will handle that.

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Dean L. Schorno, Rigel Pharmaceuticals, Inc. - Executive VP & CFO [4]

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Eun, so from a gross-to-net perspective, we reported on our gross product sales of $2.3 million a $500,000 gross-to-net adjustment, or about 22%. Let me -- we book that on a sell-in basis, which means that we're required to essentially book revenue on the full 242 bottles that we delivered. So we need to provide estimates of what we think will happen with respect to a variety of factors, including the mix, government versus commercial as well as adjustments such as the Medicare donut hole. So that 22%, again, is an estimate. We believe that these estimates have all been conservative, and therefore, while we'll see -- we expect the gross-to-net adjustment over time to normalize likely below 20%.

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Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [5]

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Okay. All right. And then how about in terms of end-user demand? So you shipped the 242 bottles, but 77 have gone to the end users. So that's about less than 40%. So over time, after a couple of quarters, what do you think would be the kind of a normalized end-user demand when you book your net sales?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [6]

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Maybe I'd take a small initial stab and let Dean and Eldon chime in as well. I think our in-channel demand is -- will fluctuate over time, but roughly is at the right number. And we expect to grow that number on the patient-driven demand from the 77 we showed this quarter to something that is continuing to grow. And that's our full expectation.

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Dean L. Schorno, Rigel Pharmaceuticals, Inc. - Executive VP & CFO [7]

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So as I noted in my comment and in the details, you see that there's 165 bottles currently in our distribution channel. I'll call it inventory of the distributors. We've recognize revenue on those -- on that unit volume. As future quarters roll on, we don't expect to see a material increase to that number, at least in the near term. As our business scales, we could see that number increase, but we'll go ahead in future quarters and let you know what that inventory level in the channel is. Again, we think that it will normalize in the area that it is at the end of Q2.

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Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [8]

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Okay. And the last question is on the collaboration with Aclaris. So recently, they had some early data of a JAK inhibitor in alopecia. Can you comment on what's your financial agreement in terms of financial terms with Aclaris in terms of a milestone -- potential milestones that you'd receive as well as royalty revenue if a drug gets approved?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [9]

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Sure. So Aclaris is a very good collaborator of ours. They've made very good progress with the JAK inhibitors that we license to them. And in June, I believe, they put out some initial interim data on that molecule. We do get -- we licensed the program to them preclinically, so the deal terms are commensurate with that. We do get milestones and -- as they make clinical progress, and we'll report that as we get it. And we do receive royalties based on that. The royalties are, again, commensurate with a preclinical program.

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Kyung Yang, Jefferies LLC, Research Division - MD & Senior Equity Research Analyst [10]

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Okay. I mean, I think in the past, you've mentioned that there is a milestone payment at the end of a Phase II study, right?

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [11]

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I think it might be a little beyond that but not very distant than that, so yes.

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Operator [12]

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And your next question comes from Do Kim with BMO Capital Markets.

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Guyn Kim, BMO Capital Markets Equity Research - Analyst [13]

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Congrats on the launch. On reimbursement, do you have a sense of what the average time to reimbursement approval is? And when you said that there's coverage delays, what kind of pushback are you seeing from the insurers? Or the reason for the delays?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [14]

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Sure. This is Eldon. So the first thing is as far as turnaround time, which I think is what you're referring to, I think that's an important metric that we will be tracking. And although we're still at this stage of the early launch, it's something that we are analyzing at this time and trying to determine what that means and how that looks. So I don't think, at this point, that we'd want to reveal that metric but -- or talk about that data at this early point. I think it's something we may report on in the future. I will emphasize, though, that we did have good shipments in the 4-week time, so I think we are clearly seeing prescriptions move through the system on a timely basis. And we're not seeing a majority of patients that are on the free trial program. So that would certainly signal, again, that there is a limited need for that, although we do have patients on that, that are beginning to convert over to reimbursed. As far as the time with the -- I think you were asking -- would you mind repeating your second question, actually, just so I make sure I understand it?

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Guyn Kim, BMO Capital Markets Equity Research - Analyst [15]

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Yes. It was the reasons for the coverage delays or potential denials, if there are any.

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [16]

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Yes. I think that it's -- we are working with payers through what's known as an exception process. So as I mentioned, we are gaining access and engaging with the top 25 payers. And so launching in the middle of the year, that will, of course, take time. Usually, it's roughly a 6-month time period. And so what we're doing is working with those payers and in between now and when they have a formal formulary P&T Committee, to make sure that we have good coverage and that we establish criteria for access. So there is an exception process until we're able to come to an agreement with those payers on coverage criteria and ultimately being added to formulary, and that's, again, a normal process, as expected. And that can take a little bit longer. However, as with many of the larger payers and PBMs, we are working with them as well, and we're communicating with them to determine an interim process to move everything along as quickly as possible. So I think any delays that we're seeing are as expected and not anything unusual. We're also engaging with regional payers as well along the way, but you probably know there are many of them, and they manage a smaller proportion of lives on a per-payer basis.

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Guyn Kim, BMO Capital Markets Equity Research - Analyst [17]

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Great. That's helpful. And for Dean, when you say that gross-to-net will likely go below 20%, what are the primary factors that would drive that change? Is it just all payer mix? And on your prior comments, when you said the revenues will stabilize in 2Q, or the demand will, do you mean that you'll transition to a sell-through method in that period?

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Dean L. Schorno, Rigel Pharmaceuticals, Inc. - Executive VP & CFO [18]

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Yes. So on the gross-to-net adjustment, so the -- as you suggest, the biggest element is the mix. So if our commercial mix -- and as Eldon said, we're estimating about a 50-50 mix between commercial and government payers. On a net basis, the government payers, as you think about Medicare and the Medicaid program, those are at a lower net price. And then the commercial payers are, obviously, at a higher price. So the biggest driver is the mix as well as elements such as the donut hole will also affect the gross-to-net. So that, again, is the big driver. With respect to the -- my comment on the normalizing of the in-channel inventory, let me say it again. So in -- during the quarter, we ended the quarter with about 165 bottles that were remaining in our distribution channel. 77 had been sold to patients in clinics, 165 in inventory. As we go forward, we'd expect that, that inventory level in the channel would remain at about 165. So as we have volume reported in future quarters, it will be primarily from new bottles shipped to both patients and clinics, and that inventory will become less of a factor in our overall revenue mix.

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Operator [19]

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And your next question comes from Joe Pantginis with H.C. Wainwright.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [20]

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First, I wanted to clarify something. During your prepared comments, with regard to the ongoing marketing, you talked about, I believe, publishing more data in the coming months. Can you elaborate a little bit on that?

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [21]

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Presenting more data.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [22]

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Presenting more data on these -- on ITP as well as AIHA. We hope to have some presentations. There might be a few posters at the ASH meeting, for example, late this year and then next year, much like we did this year, at EHA and other conferences.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [23]

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Okay. No, that's helpful. And then with regard to, I guess, the initial patient mix, you have described, on prior calls, obviously, patients -- initial targeting as later stage, for example. You did mention, I believe, that even some of the responses that physicians are seeing included patients that have not responded well to other therapies. Curious to see what level of, say, earlier-stage patients might be in the mix currently.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [24]

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Sure. I can take that one. We are -- we're really seeing a very good mix. We expected to see mostly later-line patients, and we are seeing that overall. The majority is probably third, fourth line and later, but we are seeing a significant number of patients at the earlier line of therapy as well. So it's pretty balanced. And so we're actually a little surprised by that in a good way. We did expect to see some sampling of that, but it's a little bit better than we had anticipated. I think that's a very good sign for the future that, already, physicians see that this product could have a role in earlier lines of therapy at this point.

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Joseph Pantginis, H.C. Wainwright & Co, LLC, Research Division - MD of Equity Research & Senior Healthcare Analyst [25]

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No, that is a good sign. And then my last question, I'm not sure if you can answer yet. You're in ongoing FDA discussions, as you mentioned, for AIHA. Just curious if you could share at least a wish list or sort of your goal of what a pivotal trial might look like, even though it's ongoing right now.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [26]

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Yes. Let me -- before I ask Anne-Marie to respond, let me just remind you about the AIHA opportunity, because I think -- we think it's a tremendous opportunity. I think there's a tremendous medical need in that indication for new treatments, specifically ones that are vetted, approved and verified to be beneficial to patients. And that's our objective. And next to commercializing TAVALISSE in ITP and driving that success, the second most important thing for this company is moving forward with AIHA and, as part of that, figuring out what it is that the FDA is going to ask us to do, most of which we currently are still in flux. But I'll ask Anne-Marie to address that.

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Anne-Marie S. Duliege, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Medical Officer [27]

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Yes. Without getting into the specifics of discussions that are ongoing with the FDA, in general, a key element of the study design that will matter ultimately, which is the patient population, the exact nature of the patient population to be enrolled, the sample size of the trial and the definition of the primary endpoint, so...

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [28]

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So those are things that are still in development, and I think we feel comfortable that by the end of the summer and, certainly, by the time we have our Analyst Day in October, that we'll be able to be much more crisp on the design of the trial and all the numbers of patients, et cetera, and some estimate in terms of the time frames.

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Operator [29]

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(Operator Instructions) And our next question comes from Chris Raymond with Piper Jaffray.

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Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [30]

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This might be -- I know -- I don't think you guys covered this, so this might be a dumb question. But I thought every patient was going to be given a free bottle, like a free 1-month supply. So can you just clarify? These 77 bottles shipped to patients, that's reimbursed, that's paying, right? That's not free drug. Is that correct?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [31]

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That's correct, Chris. So when there is -- the way we've structured this program, we looked pretty closely at a lot of guidelines. But the way we structured it is if there's a delay in access, the physician or the patient can request an interim supply. So that's the way it's structured. So now we're seeing a pretty small percentage of patients getting that. So I think that's encouraging that it's not a large percentage, but it's also reassuring to our customers, our physicians and patients that if they need to get on access quickly, to get -- excuse me, to get on drug quickly, we can provide for that.

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Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [32]

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Okay. That was what I was getting at, is can you give some sort of range as to what that initial number of patients were required the free drug that might roll over into paying patients.

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [33]

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It's less than 15% of what was shipped.

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Christopher Joseph Raymond, Piper Jaffray Companies, Research Division - MD & Senior Research Analyst [34]

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Okay. Okay, good. And then the next question -- I know you answered a previous question on the lines of therapy. But do you get a sense of the source of these 77 patients, maybe a mix between folks who were on off-label Rituxan versus the TPO mimetics. Do you have any sense?

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Eldon C. Mayer, Rigel Pharmaceuticals, Inc. - Executive VP & Chief Commercial Officer [35]

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Yes, that's a great question, Chris. I mean, that's part of why -- I think it's data that we'd like to analyze a little bit more. We just got the data recently. So I think I'd love to discuss that with you in the future, when we have time to really sift through it and see what it means. I can tell you, again, it's a mix across all patients, all enrollments that we saw. And we have pretty good visibility. We just haven't had time to really analyze all the data yet. So it is reliable data. The enrollments that come into our hub, if you will, which is RIGEL ONECARE -- so as part of the reimbursement process, as you probably know, many payers will require a case history to make sure that they have had at least one prior therapy. And this is something they require as standard with a prior authorization. So in the course of that process, we do get visibility to a high number of them. We may have more data later, so I hope that answers your question for now. We should have more on that at another time.

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Operator [36]

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And at this time, I'm showing no further questions in queue. I'd like to turn the call back over to President and CEO, Raul Rodriguez, for further remarks.

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Raul R. Rodriguez, Rigel Pharmaceuticals, Inc. - President, CEO & Director [37]

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Thank you, and thank you for those questions. So before I finish, I'd like to remind you more globally what we're trying to accomplish here. That is provide life-improving treatments to patients with serious illnesses and get financially rewarded for this. And I think this quarter, for the first time, we began to achieve that.

I attended the Platelet Disorder Support Association meeting, PDSA meeting, in Cleveland a few weeks ago. It was their 20th anniversary. And it's my favorite conference to attend on a yearly basis because it's mostly oriented towards patients. The PDSA itself is a very valuable ally in communicating the availability of TAVALISSE to patients suffering from ITP. At this meeting, there was real excitement from patients about having a new treatment option, the first new treatment option in over 10 years. That's incredible. They were finding out the product and I think a substantial amount of enthusiasm for what they were hearing. At various breakout sessions, they asked, has anyone tried TAVALISSE? And a number of patients raised their hand on those. I don't know how they're doing, but I think well. What we are hearing from doctors is that they are seeing good initial responses from the patients that they're trying the product, and that's very gratifying. So I wanted to say thank you for helping us achieve that.

So in the upcoming weeks, we'll give you regular updates on our progress. We look forward to seeing you at our Analyst Day in October and thank you so much for your time.

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Operator [38]

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Ladies and gentlemen, thank you for your participation in today's conference. This concludes the program. You may now disconnect. Everyone, have a great day.